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New .COM Registry Agreement Says No More Price Rises For Six Years

The US Department of Commerce has finally renewed Verisign’s contract to run the .COM registry for the next six years, but surprisingly they have denied the registry’s ability to raise prices as part of the approval.The announcement means the fee Verisign charges registrars for .COM domain names will remain at the current $7.85 for the life of the agreement that will run from 1 December 2012 through to 30 November 2018. In the contract, that ICANN and Verisign had earlier reached agreement upon, it would have seen VeriSign able to increase the fee by as much as seven percent four times over the term of the contract that could have meant the .com fee could have reached $10.29.But there is a caveat, with the possibility of removing pricing restrictions entirely if Verisign demonstrates to the Commerce Department’s satisfaction that market conditions no longer warrant such restrictions.The restriction on increasing the fee is being taken as a victory for the Internet Commerce Association who lobbied against the increase, and actually wanted a decrease to $5.86.Writing on the ICA blog, Philip Corwin said:
ICA is taking half a victory lap over this welcome news. DOC went further than we had urged on the price freeze front, as we’d suggested that VeriSign be permitted to adjust wholesale prices to reflect increases in the Consumer Price Index. But it did not take up our suggestion that the .Com base price be reduced to $5.86, the current wholesale domain price for the .Net registry that VeriSign runs out of the exact same facilities. We are under no illusions that our letter to the Departments of Commerce and Justice was the spur to their extended review of the Agreement’s pricing provisions, as we were as surprised as everyone when VeriSign announced last month that the Agreement was under price provision review that might require a six-month extension of the current Agreement. However, we do hope that the compelling arguments contained in our letter played some role in VeriSign’s decision to accept this deal rather than have discussions go into overtime and risk other parties chiming in for the type of price restrictions and rollbacks we advocated.The news came as a shock to the share market, with shares dropping 13 percent to $34.15 at the close of trade in New York, the biggest decline since 26 October. Verisign’s share value has now lost 4.4 percent this year.In a conference call with investors following the announcement, Verisign Chief Executive Officer Jim Bidzos said:
“We’re extremely well positioned even without the pricing terms in the previous agreement. We’re still a growth company.”Speaking on the announcement, Lawrence E. Strickling, Assistant Secretary of Commerce for Communications and Information and NTIA Administrator, said renewal of the agreement was in the public interest.”I’m pleased the Department of Commerce was able to find that renewal of the agreement is in the public interest,” said Strickling. “Consumers will benefit from Verisign’s removal of the automatic price increases. At the same time, the agreement protects the security and stability of the Internet by allowing Verisign to take cost-based price increases where justified.”The NTIA announcement, including a link to the amendment, is available at:
www.ntia.doc.gov/press-release/2012/department-commerce-approves-verisign-icann-com-registry-renewal-agreement